GIFT  OF 


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GIF? 


■     Ihll 


THE  COUNTRY'S  NEED  OF  GREATER  RAIL- 
WAY FACILITIES  AND  TERMINALS 


ADDRESS 


DELIVERED  BY 


MR.  JAMES  J.  HILL 


i  j>  !  ^*r 


The  Annual  Dinner  of  the  Railway  Business  Association, 
New  York  City 


DECEMBER  19,  1912 


THE  COUNTRY^S  NEED  OF  GREATER  RAIL- 
WAY FACILITIES  AND  TERMINALS 


ADDRESS  DELIVERED  BY 


MR.  JAMES  J.  HILL 


AT 


The  Annual  Dinner  of  the  Railway  Business  Association, 
New  York  City 

DECEMBER  19,  1912 


The  subject  of  national  transportation  is  many- 
sided.  One  aspect  of  it  takes  precedence  in  one  com- 
munity or  in  the  opinion  of  one  interest,  while  for 
others  some  different  phase  ranks  all  the  rest.  But 
every  interest  and  every  community  should  under- 
stand that  the  main  need  today  of  transportation  and 
of  the  many  activities  connected  with  and  dependent 
upon  it  is  an  increase  of  terminal  facilities.  It  is  no 
exaggeration  to  say  that  the  commerce  of  the  country, 
its  manufacturing  and  agricultural  industry,  its  pros- 
perity as  a  whole  and  the  welfare  of  every  man  in  it 
who  engages  in  any  gainful  occupation  can  escape 
threatened  disaster  only  by  such  additions  to  and  en- 

25730(i 


largements  of  existing  terminals  at  our  great  central 
markets  and  our  principal  points  of  export  as  will  re- 
lieve the  congestion  which  now  paralyzes  traffic  when 
any  unusual  demand  is  made  upon  them.  Our  natural 
material  growth  will  make  this  their  chronic  condition 
in  the  near  future  unless  quick  action  is  taken. 

If  you  increase  the  size  of  a  bottle  without  enlarg- 
ing the  neck,  more  time  and  work  are  required  to  fill 
and  empty  it.  That  is  what  has  happened  to  the  trans- 
portation business,  In  1907  traffic  was  blocked  on 
nearly  all  the  principal  Eastern  railway  lines.  It  took 
months  to  convey  an  ordinary  shipment  of  goods  from 
one  domestic  market  to  another.  The  dead-lock  was 
broken  partly  by  a  panic  that  lessened  the  volume  of 
business  and  partly  by  the  efforts  of  railway  manage- 
ments to  add,  by  increased  efficiency,  to  the  moving 
power  of  facilities  at  command.  We  neither  anticipate 
nor  desire  perpetual  business  depression.  While  the 
limits  of  efficiency  have  not  been  reached,  we  know 
that  it  cannot  be  made  to  cover  the  demands  of  our 
growth  in  population  and  production.  The  records  of 
any  large  city  will  prove  this.  The  tonnage  of  the 
Pittsburgh  District,  for  example,  by  railroad  alone, 
grew  from  64,125,000  to  152,000,000  in  the  ten  years 
between  1901  and  1911.  It  is  both  practical  and  pa- 
triotic to  ask  what  is  to  be  done. 

First,  let  us  examine  the  following  table,  compiled 
from  the  reports  of  the  Interstate  Commerce  Commis- 
sion, showing  the  recent  growth  of  the  transportation 
business  in  the  United  States: 


Increases  Per  Cent. 

1895  to  1905. 

1905  to  1910. 

1909  to  1910 

Mileage 

21 

11 

1.5 

Locomotives 

35 

22 

3. 

Passenger  Cars 

23 

16 

3.3 

Freight  Service  Cars 

45 

23 

3. 

Passenger  Mileage 

95 

36 

11. 

Freight  Ton  Mileage 

118 

37 

16.6 

Business  is  beginning  to  feel  the  swell  of  a  revival. 
The  freight  ton  mileage  of  the  country  was  less  by 
seventeen  and  a  half  billions  in  1909  than  in  1907,  and 
very  little  more  than  in  1906.  Contrast  this  with  the 
growth  of  the  single  year  between  1909  and  1910.  The 
freight  ton  mileage  grew  in  that  year  eleven  times  as 
fast  as  trackage,  and  five  times  as  fast  as  equipment. 
This  ratio  will  be  subject  to  increase  rather  than  de- 
crease. It  will  be  much  greater  in  this  year  of  large 
crops  and  added  tonnage.  If  any  manufacturer  were 
confronted  with  such  conditions,  it  would  be  clear  to 
him  that  he  must  either  refuse  business  or  more  than 
double  his  plant.  The  railroad  cannot  refuse  business. 
If  it  could  do  so  legally,  that  policy  would  still  mean 
national  panic  and  individual  ruin.  It  must  enlarge 
its  plant.  Just  what  this  means  in  the  expenditure  of 
billions  of  dollars  on  new  track  and  rolling  stock  I  de- 
monstrated more  than  five  years  ago,  and  the  facts 
have  now  been  accepted  by  all  authorities.  But  even 
the  existing  plant  cannot  be  worked  to  its  capacity 
without  larger  terminals.  Hence  the  supreme  import- 
ance at  the  very  outset  of  this  factor  of  the  transpor- 
tation problem. 


This  matter  is  vital  not  only  to  the  railroads,  but 
to  every  business  man.  It  is  the  immediate  concern  of 
every  large  city.  Cities  can  grow,  they  can  escape  de- 
cline, only  as  the  movement  of  business  between  and 
through  them  is  kept  free.  When  the  people  find  that 
their  business  cannot  be  handled,  they  must  either 
move  away  or  cease  producing  and  consuming.  They 
will  decentralize  their  traffic,  so  far  as  that  can  be  done; 
and  the  inability  of  the  railroads  to  prevent  this,  by 
reason  of  conditions  imposed  on  them  from  without, 
will  work  injury  to  all  the  great  markets  which  have 
arisen  through  the  free  play  of  economic  forces  and  the 
wise  judgment  of  the  builders  of  our  prosperity.  No 
city  can  afford  to  place  its  trade,  which  is  its  life,  on  a 
false  basis.  When  the  commerce  naturally  tributary  to 
it  is  handicapped  by  poor  terminals,  or  overloaded  with 
too  heavy  charges  on  account  of  the  excessive  cost  of 
enlargement,  it  will  go  elsewhere.  There  are  a  dozen 
places  between  the  Maine  coast  and  Norfolk  that  could 
be  made  available  for  relief.  A  city  can  never  grow 
great  enough  to  defy  safely  the  demands  of  the  laws  of 
trade  and  its  proper  accommodation.  Should  the  de- 
centralization plan  be  forced  on  traffic,  some  of  our 
greatest  cities  would  not  merely  forfeit  their  natural 
share  in  national  growth,  but  they  would  surely  decline 
in  business,  wealth  and  power. 

Interest  in  this  question  should  be  not  local  only, 
but  national.  A  railroad  terminal  performs  the  same 
function  as  a  harbor.  It  is  actually  the  largest  and 
most  valuable  harbor  used  by  the  nation's  commerce. 


Probably  no  greater  volume  of  rail  and  water  traffic  is 
transferred  in  any  city  anywhere  than  in  Duluth-Super- 
ior.  On  the  land  side  almost  the  whole  of  this  is  carried 
by  three  railroads.  It  is  received,  transferred  and  dis- 
charged without  congestion  in  the  busiest  seasons  and 
with  expedition  because  the  terminals  there  have  been 
specially  created  for  the  work  they  have  to  do.  The 
nation  has  properly  made  the  provision  of  adequate 
harbors  its  care,  and  expended  millions  of  dollars  on 
our  seaboards  and  the  Great  Lakes  to  ensure  ample 
facihties  for  loading  and  unloading  cargoes.  It  is  not 
to  be  supposed  or  desired  that  the  nation  should  fur- 
nish the  money  to  provide  those  great  harbors  known 
as  railroad  terminals,  although  they  are  vastly  more 
essential  to  the  free  movement  of  trade.  But  it  should 
smooth  the  way  and  make  easy  the  task  of  those  whose 
business  it  is  to  provide  them. 

When  traffic  is  blocked  and  the  railroad  yards  of 
the  principal  cities  are  ffiled  with  cars  that  cannot  be 
moved,  the  railroad  suffers  the  loss  of  a  portion  of  its 
earnings;  but  the  business  man  loses  a  larger  share  of 
his  trade,  and  the  workingman  his  employment.  No 
industry  can  do  more  than  protract  a  starved  exist- 
ence when  the  currents  of  transportation  cease  moving 
freely.  When  the  commerce  of  an  industrial  empire 
whose  magnitude  is  partly  indicated  by  the  clearing 
house  exchanges  of  $102,000,000,000  in  New  York 
City  alone  during  the  past  year  is  blocked,  the  whole 
nation  suffers. 

Whenever  we  have  a  big  crop  or  a  general  revival 


of  business,  the  country  hears  most  of  the  danger  of  a 
car  shortage.  The  pubHc  assumes  that  if  enough  cars 
are  provided  they  can  be  moved  on  schedule  time  from 
point  of  origin  to  destination,  wherever  these  may  be. 
This  is  not  the  real  trouble.  What  is  really  needed  is 
the  greater  movement  of  cars.  The  average  movement 
of  a  freight  car  is  about  24  miles,  or  two  hours,  per  day. 
Delays  in  loading  and  unloading  by  shippers  are  partly 
responsible,  but  much  of  the  lost  time  is  consumed  in 
getting  into,  out  of  or  through  terminal  points  where 
there  is  not  room  to  handle  the  cars.  More  cars  inten- 
sify instead  of  reducing  the  trouble.  No  other  business 
could  endure  the  loss  of  the  use  of  its  machine  plant 
for  twenty-two  hours  out  of  the  twenty-four.  One 
thousand  cars  will  cover  nearly  eight  miles  of  track. 
Each  car  must  be  switched,  loaded  or  unloaded,  or  all 
three.   This  multiplies  the  trackage  requirement. 

A  thousand  cars  are  a  fleabite  compared  with  the 
daily  movement  in  the  busy  season.  The  railroads  of 
the  United  States  carried  1,849,900,101  tons  of  revenue 
freight  in  1910.  At  the  average  load  of  21.5  tons  per 
car,  it  would  take  86,041,865  cars  to  move  it.  Nearly 
all  of  these  pass  through  some  large  terminal,  most  of 
them  several  times  in  the  year.  There  are  about  thirty 
important  traffic  centers;  and  if  the  total  movement 
were  divided  equally  between  them,  supposing  each  car 
to  pass  through  but  one  market,  and  that  only  once  a 
year,  7,858  cars  would  have  to  pass  through  each  ter- 
minal every  day  in  the  year.  Five  thousand  cars  a  day 
are  enough  to  create  a  blockade  in  many  of  the  large 


terminals  of  the  country.  Our  worst  troubles  have 
come  not  from  insufficient  rolling  stock  or  lack  of  effic- 
iency in  handling  it,  but  from  congested  terminals. 
Water  routes  give  little  assistance:  first,  because  the 
largest  streams  of  traffic  in  the  United  States  are  not 
in  a  direction  where  either  natural  or  artificial  water- 
ways can  be  used;  second,  because  a  waterway  less 
than  twenty  feet  deep  cannot  compete  as  a  carrier. 
The  waterway,  too,  may  and  often  does  increase  rather 
than  lessen  the  pressure  on  terminal  facilities.  There 
is  but  one  possible  remedy — enlarged  terminals.  The 
main  question  back  of  that  is  financial.  Where  and  on 
what  terms  is  the  money  to  be  had  for  an  improve- 
ment become  as  necessary  as  the  removal  of  a  freight! 
wreck  from  a  main  trafiic  line. 

The  two  obstacles  to  be  overcome  in  this  readjust- 
ment of  the  transportation  agency  to  the  growing  needs 
of  the  country  are  the  physical  difficulty  and  the  cost. 
The  railroads  could  not  have  foreseen  and  guarded 
against  this  need  thirty  or  forty  years  ago.  They  could 
not  then  know  where  the  greatest  markets  were  to  grow. 
They  could  not  tell  in  what  portion  of  any  city  it  would 
be  most  convenient  to  have  railroad  yards  placed  a 
generation  later.  If  they  had  secured  land,  changes  in 
business  districts  would  in  many  cases  have  made  their 
forethought  useless.  Even  if  gifted  with  prophetic 
knowledge,  they  could  not  then  have  commanded  the 
resources  for  such  an  undertaking,  any  more  than  the 
country  town  of  today  can  put  in  all  the  improvements 
that  its  future  as  a  city  will  require  and  justify.  It  is  a 

7 


natural  and  inevitable  condition  that  we  face.  Upon 
the  railroads  rests  the  responsibility  of  performing  the 
work  now  to  be  done.  Will  they  be  left  free  to  attempt 
it  under  such  conditions  as  will  make  the  performance 
of  it  a  feasible  thing  and  not  a  miracle? 

In  some  places  it  will  be  physically  impossible  to 
secure  the  land  area  for  proper  terminals.  The  space 
that  must  be  used  is  generally  in  or  near  the  business 
heart  of  the  city;  often  along  the  waterways,  where 
enterprise  has  been  busy  and  land  values  have  reached 
their  highest  point.  Therefore  the  space  for  such  ter- 
minals is  either  not  available  on  any  terms  or  will  cost 
sums  that  sound  fabulous.  The  financing  of  new  ter- 
minals presents  a  far  more  serious  problem  than  the 
financing  of  a  new  railroad.  Large  sums  of  money  must 
be  raised.  The  owners  of  capital  will  not  supply  them 
unless  they  are  satisfied  with  the  security  and  with  the 
prospect  for  a  sure  and  adequate  return  on  their  money. 

What  security  can  the  railroads  offer  for  such  a  loan? 
Already,  merely  for  constructing  and  operating  their 
existing  machine,  many  of  them  have  not  only  pledged 
their  credit  to  the  limit  but  have  absorbed  a  large  share 
of  their  surplus  earnings  that  in  other  countries  would 
have  been  paid  out  in  dividends.  The  ability  of  the 
Pennsylvania  system  to  handle  its  big  business  is  due 
in  no  small  degree  to  its  past  policy  of  diverting  profits 
legally  the  property  of  the  stockholders  to  the  con- 
struction of  betterments.  There  is  not  a  well-managed 
railway  of  any  size  in  the  country  of  which  the  same 
is  not  true  to  some  extent.    And,  with  the  increase  of 


their  expenses  and  the  hmitation  of  their  income  by 
public  authority,  there  is  coming  to  be  Uttle  or  no  sur- 
plus revenue  that  may  be  so  employed.  Net  income, 
not  gross,  is  the  index  of  prosperity  and  the  foundation 
of  credit.  Gross  revenues  grow,  but  expense  grows  fast- 
er. Returns  to  the  Bureau  of  Railway  Economics, 
covering  90  per  cent  of  all  the  steam  railway  mileage  in 
the  United  States,  show  that  during  the  first  seven 
months  of  1912  operating  revenues  increased  3.3  per 
cent  per  mile  as  compared  with  the  same  period  in 
1911,  operating  expenses  increased  4.9  per  cent,  and 
net  operating  revenue  decreased  .5  per  cent.  The  ad- 
ditions to  taxes  and  other  incidental  expenses  will  raise 
this  figure.  The  progressive  decline  of  net  earnings  per 
mile  under  the  existing  method  of  rate  regulation  is 
assured. 

The  properties  of  many  systems  are  already  en- 
cumbered to  the  hmit  of  credit  and  solvency.  Securi- 
ties have  been  consolidated,  equipment  trusts  have 
placed  what  are  practically  chattel  mortgages  on  roll- 
ing stock,  and  money  cannot  be  raised  except  for  a 
short  term  and  at  high  rates.  Ten  or  fifteen  years  ago 
4  per  cent  would  bring  in  capital  for  railroad  improve- 
ments. Strong  properties  sold  their  bonds  bearing  33^ 
per  cent  interest.  Now  some  of  the  strongest  roads  are 
paying  43^  per  cent  for  new  capital.  Properties  less 
well  known  for  stability  and  earning  power  pay  more. 
The  rate  has  advanced  by  from  13/^  to*  2  per  cent  in  Uttle 
more  than  ten  years.  The  great  sums  required  to  ex- 
tend our  terminals  to  meet  the  actual  business  of  the 


country  can  be  had  only  on  condition  that  the  pay- 
ment of  principal  and  interest  is  absolutely  secured. 
The  railroads  can  pay  money  only  as  they  are  permit- 
ted to  earn  it.  In  the  last  resort  it  is  up  to  the  people  to 
say  whether  or  not  these  terminals  and  other  facilities 
shall  be  supplied;  just  as  it  is  up  to  them  to  suffer  the 
severest  of  the  consequences  if  they  are  not. 

Two  questions  arise  immediately  and  naturally 
from  the  situation  as  it  discloses  itself  to  any  one  who 
chooses  to  look  at  the  facts.  The  first  is,  ^'Why  are  the 
railways  not  now  in  a  position  to  borrow  the  money 
and  build  the  terminals  at  once?'^;  the  second  is,  ^'What 
have  the  railways  done  to  entitle  them  to  confidence, 
to  relief  and  to  a  more  fair  and  generous  treatment  by 
the  public?^\  Each  of  them  can  be  answered  by  an  ex- 
amination of  facts  officially  vouched  for. 

The  impairment  of  credit  has  already  been  partly 
set  forth  in  presenting  the  difficulty  of  making  loans 
for  improvement  purposes,  and  noting  the  higher  rate 
that  must  be  paid.  How  has  this  happened?  The  limit- 
ation has  come,  of  course,  from  two  directions;  decreas- 
ed earning  power  and  increased  expenses.  A  railroad 
has  no  other  source  of  income,  generally  speaking,  than 
receipts  from  rates.  These  have  steadily  declined. 
While  the  price  of  everything  else  rises,  the  price  of 
transportation  falls.  The  average  freight  rate  per  ton 
per  mile  received  by  the  railroads  of  the  United  States 
fell  from  9.27  mills  in  1890  to  7.53  mills  in  1910.  This 
is  partly  the  effect  of  legislative  regulations  and  the 
orders  of  public  commissions,  and  partly  due  to  volun- 

10 


tary  reductions  made  possible  by  increased  efficiency 
and  increase  in  the  density  of  traffic.  On  the  whole, 
railroad  rates  in  the  United  States  are  the  lowest  in 
the  world.  But  they  cannot  continue  to  grow  less  for- 
ever. 

Rates  must  be  such  as  will  bring  in,  above  operat- 
ing expenses,  a  reasonable  return  on  the  investment  as 
measured  by  the  value  of  the  property.  So  much  the 
courts  will  uphold.  But  that  is  not  enough,  if  the  rail- 
roads are  to  go  into  the  money  markets  of  the  world  as 
borrowers  of  billions  of  dollars.  A  man  must  do  better 
than  graze  the  sharp  edge  of  bankruptcy  if  he  is  to  find 
himself  welcomed  as  a  prospective  creditor  by  the  in- 
vestor. So  the  railways,  if  they  are  to  carry  this  new 
burden,  must  not  only  be  protected  against  the  further 
destruction  of  their  credit  involved  in  an  unending  suc- 
cession of  attacks  upon  their  existing  revenue.  They 
must  also  be  permitted  to  earn  enough  to  assure  capital 
that  they  can  pay  interest  and  principal  of  the  heavy 
additional  loans  asked.  By  the  light  of  this  practical, 
unchangeable  fact  the  railway  regulation  of  the  future 
must  be  guided.  If  it  is  not,  then  congestion  and  a 
general  paralysis  of  trade,  costing  the  country  more 
than  double  its  whole  bill  for  transportation  cannot  be 
avoided. 

The  Railroad  Securities  Commission,  with  Presi- 
dent Hadley  at  its  head,  the  ablest  and  most  disinter- 
ested body  which  has  ever  investigated  the  subject  in 
this  country,  said  in  its  report:  ''Where  the  future 
is  uncertain  the  investor  demands,  and  is  justified  in 

11 


demanding,  a  chance  of  added  profit  to  compensate 
for  his  risk.  We  cannot  secure  the  immense  amount  of 
capital  needed  unless  we  make  profits  and  risks  com- 
mensurate. If  rates  are  going  to  be  reduced  whenever 
dividends  exceed  current  rates  of  interest,  investors 
will  seek  other  fields  where  the  hazard  is  less  or  the 
opportunity  greater.  In  no  event  can  we  expect  rail- 
roads to  be  developed  merely  to  pay  their  owners  such 
a  return  as  they  could  have  obtained  by  the  purchase 
of  investment  securities  which  do  not  involve  the  haz- 
ards of  construction  or  the  risks  of  operation' '.  Exactly 
what  happens  when  this  right  rule  is  reversed,  and  the 
railroads  are  forbidden  by  curtailment  of  their  earning 
power  to  attract  capital  may  be  understood  from  the 
following  extract  from  an  editorial  on  the  financial  year 
which  appeared  in  the  New  York  Times  of  October  3, 
of  this  year:  "Railways  have  issued  a  total  of  stocks 
and  bonds  and  notes  smaller  this  year  than  last  by 
$23,821,100,  while  industrials  have  increased  their  is- 
sues by  $362,288,650.  The  decrease  of  the  railway 
bond  issues  was  no  less  than  $99,889,400,  and  they  were 
formerly  the  favorite  investment.  The  increase  in 
industrials  was  mostly  in  stock,  the  figures  being 
$259,416,250.  Formerly  industrials  were  unable  to 
market  stock  in  competition  with  the  railways,  but  this 
year  they  have  been  able  to  place  between  three  and 
four  times  as  much  as  the  railways.'^ 

While  revenue  was  shrinking,  the  obligatory  ex- 
penses of  the  railways  of  the  country  have  increased 
enormously.   Their  equipment  alone  is  valued  at  near- 

12 


ly  three  and  a  half  billion  dollars;  the  increase  during 
the  last  nine  years  being  45.3  per  cent  in  locomotives 
and  39.7  per  cent  in  freight  cars.  For  the  mere  main- 
tenance of  equipment  they  spent  over  $413,000,000  ia 
1910.  When  we  come  to  consider  operation,  the  figure* 
mount  as  rapidly  as  those  on  a  pressure  gauge  when 
the  needle  is  racing  toward  the  danger  point.  The 
wages  of  the  railroad  employes  in  this  country  have 
reached  the  stupendous  total  of  over  $1,200,000,000  a 
year.  According  to  the  advance  summary  of  the  report 
of  the  Interstate  Commerce  Commission  for  1911,  the 
total  number  of  employes  in  the  United  States  decreas- 
ed in  that  year  by  29,611  as  compared  with  1910,  while 
the  total  wages  paid  increased  by  $64,741,164.  In  no 
other  occupation  has  such  a  showing  ever  been  made. 
If  the  wage  scale  of  1899  had  been  in  effect,  the  item  of 
labor  cost  would  have  been  some  $300,000,000  less. 
Against  liberal  wages  the  railways  do  not  protest,  be- 
cause they  know  that  they  can  render  safe,  adequate 
and  satisfactory  service  in  proportion  as  their  employes 
are  well  fitted  and  well  paid  for  their  work.  But  new 
outlay  must  be  balanced  by  new  income  unless  opera- 
tion is  to  cease.  Public  sentiment  almost  always  sup- 
ports the  demand  of  employes  for  higher  wages.  Public 
sentiment  cannot,  from  the  point  of  view  of  either 
justice  or  safety,  continue  to  prohibit  or  prevent  the 
levying  of  such  rates  as  alone  will  enable  the  employer 
to  pay  the  wage  rate  in  many  cases  practically  imposed 
from  without  as  authoritatively  as  are  the  traffic  rateg 
that  a  commission  orders  into  effect. 

13 


Another  item  of  expense  which  grows  out  of  all  pro- 
portion to  railway  revenue  or  national  development  is 
taxation.  In  1890  the  taxes  paid  by  all  the  railroads 
aggregated  $31,207,469;  in  1910  they  had  risen  to  $103, 
795,701;  for  1911  they  are  estimated  at  $109,000,000 
and  may  be  a  couple  of  millions  more.  The  increase  in 
twenty  years  up  to  1910  is  233  per  cent.  This  is  by 
direct  act  of  the  people.  The  extravagance  of  all  mod- 
ern legislative  bodies,  the  doubling  of  state  and  nation- 
al expenses  within  a  few  years  and  the  continuous 
issue  of  bonds  for  all  sorts  of  public  purposes  formerly 
met  by  general  taxation  have  drained  the  ordinary 
sources  of  revenue.  The  railroad  treasury  has  come  to 
be  looked  upon  as  the  public  milch  cow,  from  which  a 
new  supply  of  nourishment  may  always  be  obtained. 
So  railway  taxes  have  risen  by  leaps  and  bounds.  Each 
mile  of  line  in  the  country  paid  $199  in  taxes  in  1890, 
and  $431  in  1910.  The  owner  of  capital  will  not  be 
over-anxious  to  lend  it  to  concerns  which,  if  the  pre- 
sent tendency  is  not  checked  or  reversed,  will  present- 
ly see  all  receipts  beyond  a  bare  living  income  diverted 
by  taxation  to  the  public  treasury.  When  the  state  ap- 
propriates out  of  the  earnings  of  the  railways,  as  it  did 
in  1910,  more  than  one-fourth  as  much  as  was  paid  in 
dividends  to  all  the  stockholders,  the  interest  rate 
naturally  rises  and  the  possible  supply  of  new  capital 
for  railway  investment  threatens  to  vanish  altogether. 

If  you  take  two  dollars  out  of  your  purse  each  time 
you  put  a  dollar  in,  bankruptcy  will  happen  in  time.  The 
railroads  are  not  yet  reduced  to  the  point  of  collapse, 


14 


because  most  of  them  are  still  permitted  to  earn  and 
retain  dividends.  But  their  borrowing  power  has  been 
cut  down  until  it  suffices  only  for  hand-to-mouth  im- 
provement. Their  credit  must  be  so  far  restored  as  to 
make  it  equal  to  carrying  forward  the  creative  and  con- 
structive work  which  we  have  seen  to  be  a  condition  of 
continued  national  growth.  How  does  their  record  for 
trustworthiness  stand?  What  have  they  done  to  show 
themselves  fit  for  that  larger  liberty  of  action  which  is 
indispensable  if  they  are  to  perform  all  the  functions 
belonging  to  the  proper  conduct  of  their  business? 

The  railroads  of  the  United  States  are  entitled  to 
both  confidence  and  relief  because  they  have  not  abus- 
ed their  trust  in  the  matter  of  capitalization.  While, 
to  make  possible  the  raising  of  money,  stock-bonuses 
undoubtedly  were  given  in  their  earlier  history,  it  is 
true  of  them  as  a  whole  today  that  they  have  by  far 
the  smallest  capitalization  per  mile  in  the  world;  and 
that  they  have  kept  their  capitalization  low  by  using 
for  betterments  millions  of  earnings  which  anyivhere 
in  Europe  would  have  been  handed  over  to  stockhold- 
ers, leaving  the  cost  of  improvements  to  be  charged  to 
capital  account.  This  is  one  of  the  best-established 
facts  in  railroad  history,  though  few  people  yet  realize 
how  great  is  the  difference  in  our  favor. 

The  statistics  of  railway  capitalization,  as  given  by 
the  Interstate  Commerce  Commission,  are,  unfortu- 
nately, not  always  computed  according  to  the  same 
rules.  This  weakens  or  destroys  their  value  for  com- 
parison. A  change  of  statisticians  may  involve  a  change 

15 


of  method.  However  conscientious  the  motive,  the  re- 
sult alters  relations  which  should  be  constant.  Thus 
the  official  railway  capitalization  in  1909  was  $59,259. 
In  1910  it  is  returned  at  $62,657.  But  the  increase  is 
chargeable  mostly  to  changes  in  the  assignment  of 
capital  stock  to  one  account  instead  of  another;  and 
one  such  change  alone  operates  to  increase  the  average 
capitalization  $700  per  mile  for  the  entire  United  Stat- 
es. **Manifestly",  says  the  Statistician  of  the  Commis- 
sion in  his  report,  ''a  figure  so  constructed  should  not 
be  subjected  to  the  burden  of  sustaining  any  very 
weighty  conclusions".  The  Bureau  of  Railway  News 
and  Statistics  estimates  the  capitalization  of  1911  at 
$59,345  per  mile;  probably  $60,000,  in  round  numbers, 
represents  about  the  average  actual  capitalization  to- 
day. This  figure  is  to  be  compared  with  the  capitali- 
zation per  mile  in  other  countries,  as  shown  in  the  fol- 
lowing table : 

United  Kingdom  $275,040 

.     England  alone  $314,000 

Germany  $109,788 

France  $139,237 

The  increase  of  capitalization  per  mile  of  railroad 
in  England  and  Wales  for  the  nineteen  years  between 
1890  and  1909  was  from  $255,073  to  $328,761,  or 
$73,688;  against  a  total  capitalization  for  all  the  roads 
in  the  United  States  in  1909  of  $59,259.  It  exceeded 
our  total  capitalization  by  $14,429  per  mile.  The  aver- 
age annual  increase  for  the  nineteen  years  has  been 
$3,873  per  mile,  exceeding  the  entire  annual  net  earn- 

16 


ings  per  mile  of  railways  in  this  country  during  the 
corresponding  period.  Our  capitalization  per  mile  is 
from  one-half  to  one-fifth  that  of  European  countries; 
partly  because  the  initial  cost  of  construction  was  great- 
er there,  but  largely  because  of  a  fixed  difference  in 
policy.  The  American  railway  makes  improvements 
so  far  as  possible  out  of  earnings  or  surplus,  leaving 
capital  account  to  carry  only  new  construction.  The 
European  road  distributes  earnings  among  its  stock- 
holders, and  issues  new  capital  to  provide  necessary 
betterments.  The  difference  accounts  for  the  sharp 
contrasts  of  the  figures  presented  above. 

The  American  policy  is  in  the  public  interest,  be- 
cause it  tends  to  keep  fixed  charges  down.  A  manage- 
ment can  take  its  own  time  about  replacing  a  surplus 
used  for  improvements.  When  the  money  has  been 
procured  by  issuing  new  bonds,  the  interest  on  these 
is  a  mandatory  charge  and  must  be  added  to  the  total 
to  be  raised  annually  from  rates.  So  far  as  the  public 
is  concerned,  the  American  policy  is  far  better. .  And  it 
should  be  remembered  that  it  became  the  American 
policy  by  choice,  not  of  legal  compulsion,  at  a  time 
when  managements  had  a  liberty  of  action  denied  to 
them  now.  It  would  be  an  ironic  turn  of  affairs  if  this 
policy,  deliberately  followed  of  their  own  option  by 
railroad  managements  through  the  whole  history  of 
American  railroading,  at  the  expense  of  the  stockhold- 
ers and  because  it  favors  the  rate-paying  public,  should 
be  reversed,  and  the  burden  transferred  to  the  people's 
shoulders  as  a  consequence  of  regulations  prescribed 

17 


by  the  people  themselves.  At  present  it  seems  not  im- 
probable that  this  will  come  true  to  some  extent.  A 
capitalization  of  $60,000  per  mile  will  not  transact  the 
business  of  the  country.  On  all  trunk  lines  and  where- 
ever  population  becomes  dense  and  traffic  heavy,  cap- 
italization will  have  to  be  made  larger  for  new  facilities 
and  double  tracking.  The  heavy  amounts  required  to 
provide  terminals  must  also  be  charged  to  capital  ac- 
count. With  wages  and  material  as  high  as  they  are 
now,  billions  will  be  required.  If  additional  money 
must  be  borrowed  for  the  less  permanent  improve- 
ment of  which  I  shall  speak  presently,  the  country  will 
eventually  have  to  carry  a  capitalization  more  nearly 
approaching  that  of  Europe;  and,  as  a  necessary  corol- 
lary, rates  will  rise  to  a  corresponding  level. 

The  railways  are  entitled  to  confidence  and  relief 
because  they  have  displayed  efficiency  in  the  conduct 
of  their  business.  This  is  just  as  marked  as  their  rela- 
tively low  capitalization.  The  figures  already  given 
show  an  increase  of  traffic  in  a  year  about  five  times 
as  great  as  the  increase  of  equipment  and  eleven  times 
the  increase  of  mileage.  Yet  the  machine  has  been 
hauling  its  load,  because  eflSciency  has  been  developed. 
Heavier  rails,  larger  engines,  cars  of  greater  capacity, 
increased  train  movement  and  the  full  utilization  of 
equipment  have  kept  business  moving.  The  density  of 
traffic  in  England,  France  and  Germany  should  be  as 
much  greater  than  in  the  United  States  as  the  density 
in  the  Middle  exceeds  that  in  the  far  Western  states. 
Yet  here  are  the  facts: 

18 


Ton  Miles  Per  Mile  of  Road 

France  496,939 

United  Kingdom  529,622 

Germany  827,400 

United  States  (1910)  1,071,086 

It  is  clear  that  our  railroads  have  been  capably- 
managed,  and  that  the  resources  and  powers  entrusted 
to  them  are  being  used  to  the  highest  business  advant- 
age. How  the  money  they  spend  is  being  employed  is 
shown  by  the  fact  that  our  railroads  move  272  ton 
miles  of  freight  per  dollar  of  net  revenue,  where  the 
United  Kingdom  shows  only  58,  Germany  172  and 
France  88.  For  honest  and  efficient  conduct  our  rail- 
ways have  no  equals  in  the  world.  By  this  supreme  test 
they  declare  their  fitness  for  the  gigantic  work  that  still 
remains  to  be  undertaken. 

Not  only,  as  I  have  shown,  have  they  not  charged 
to  capital  the  cost  of  improvements  covered  by  stock 
and  bond  issues  in  other  countries,  but  they  have  shar- 
ed their  gains  liberally  with  the  people  through  rate 
reductions.  It  has  become  common  to  think  of  the  pro- 
gressive lowering  of  rates,  while  all  other  charges  are 
rising,  as  the  work  of  legislative  compulsion.  On  the 
contrary,  many  of  the  most  important  reductions  made 
in  the  past  were  voluntary.  These  are  the  lowering  of 
charges  on  the  great  staple  products  of  the  soil.  This 
has  made  settlement  possible.  It  has  made  it  possible 
for  the  farmer  to  realize  the  benefit  of  high  prices  for 
his  crops.  It  has  doubled  production  again  and  again. 
It  has  made  possible  the  movement  of  lumber  from  the 

19 


Pacific  Coast  to  the  Middle  West  and  even  the  Eastern 
markets.  It  has  become  a  definite  policy.  And  it  has 
left  in  the  pockets  of  the  people  an  enormous  amount 
of  money  that  would  have  gone  to  the  carriers  or  at 
least  been  shared  by  them  if  they  had  fought  against 
cheap  transportation  for  the  farm  instead  of  fostering 
it.  If  the  freight  and  passenger  rates  in  force  on  the 
Great  Northern  system  in  1881  had  remained  unchang- 
ed until  1910,  there  would  have  been  collected  from 
the  pubHc  $1,267,411,954  additional.  This  amounts  to 
more  than  eight  times  the  average  par  value  of  its  out- 
standing stock  and  bonds  in  the  hands  of  the  public 
during  the  same  period.  That  is  to  say,  if  there  had 
been  no  rate  reductions  on  that  system  during  the  past 
thirty  years,  it  could  have  paid  off  its  entire  capitali- 
zation every  three  and  three-quarters  years.  If  railroad 
rates  in  the  United  States  had  increased  as  much  in 
proportion  as  the  prices  of  commodities  and  the  wages 
of  labor  between  1894  and  1909,  the  country's  bill  for 
transportation  for  those  fifteen  years  would  have  been 
over  seven  billion  dollars  more  than  it  was. 

The  railroads,  then,  have  proved  themselves  com- 
petent and  trustworthy.  But  if  they  are  to  furnish  the 
necessary  additions  and  provide  new  terminals,  with- 
out which  the  traffic  of  the  country  can  no  more  con- 
tinue to  move  than  a  derelict  can  voyage  from  port  to 
port,  the  money  will  not  come,  as  a  magician  catches 
coins,  out  of  the  air.  It  must  be  either  earned  or  bor- 
rowed. It  seems  clear  to  any  one  familiar  with  the  con- 
ditions and  requirements  that  both  resources  must  be 

2t 


drawn  upon.  First  capitalization  must  be  materially 
enlarged.  But  the  railroads  must  be  able  to  show  that 
they  can  earn  a  fair  return  before  they  can  add  to  the 
principal  of  their  debt.  The  very  fact  of  additional 
capitalization  involves  additional  fixed  charges.  The 
investor  must  be  assured  that  such  earnings  will  not 
be  prohibited  by  the  law  before  a  loan  can  be  placed 
at  a  bearable  rate  of  interest.  And  the  higher  the  rate, 
the  greater  must  be  the  future  charge  on  traffic  to  meet 
it.  The  country  comes  to  a  stop  before  a  financial  "no 
thoroughfare",  from  which  no  exit  can  be  found  save 
through  a  relaxation  of  the  rigid  and  hostile  prohibition 
of  all  rate  advances  that  now  absolutely  negatives  the 
proper  and  necessary  expansion  of  traffic  agencies  in 
this  country. 

The  theory  of  encouraging  home  industry  has  pre- 
vailed in  this  country  during  the  greater  part  of  our 
national  existence.  Import  duties  averaging  41.22  per 
cent  were  levied  in  1911.  The  advocates  of  the  system 
claim  this  is  done  to  protect  American  Labor.  Our 
manufactures  are  protected  as  a  matter  of  national 
policy.  Transportation  costs  the  public  from  one-third 
to  one-half  as  much  here  as  in  Europe.  This  cheapness 
is  not  purchased  at  the  cost  of  the  workingman.  In 
1910  the  average  daily  earnings  of  railway  employes  in 
the  United  States  were  more  than  twice  as  great  as  in 
the  United  Kingdom,  and  two  and  three-quarters  times 
as  much  as  on  the  Prussian-Hesse  system  in  Germany. 
As  employers  of  labor  and  also  as  producers  of  a 
commodity  that  everybody  uses  directly  or  indirectly, 

21 


paying  that  labor  more  than  it  receives  anywhere  else 
in  the  world  and  supplying  that  service  for  less  than  is 
charged  anywhere  else  in  the  world,  the  railroads  de- 
serve a  public  consideration  not  extended  to  them  now. 
Second,  the  railroads  should  be  permitted  to  earn 
and  hold  a  surplus  equal  to  fifty  per  cent  of  the  amount 
they  pay  out  in  dividends,  to  be  held  for  emergencies 
and  applied  to  improved  facilities.  There  are  many 
expenses,  and  new  ones  constantly  arising,  that  must 
not  be  added  to  capital  charge  unless  rates  are  to  be  made 
that  the  public  cannot  and  ought  not  to  be  asked  to 
bear.  In  addition  to  the  heavy  demands  of  the  ordinary 
growth  of  traffic,  there  are  many  extraordinary  ex- 
penses. Public  authorities  do  not  hesitate  to  order  the 
railroads  to  provide  additional  equipment.  This,  being 
only  partially  under  the  owner's  control,  is  soon  scat- 
tered over  the  country.  The  weaker  roads  prefer  pay- 
ing a  per  diem  charge  to  buying  for  themselves.  This 
compels  the  stronger  roads  practically  to  provide  new 
equipment  for  the  whole  country  and  pay  the  cost  of 
it  from  their  own  resources.  Grade  crossings  must  be 
eliminated  both  in  the  cities  and  in  the  country.  The 
ordering  of  these  is  held  to  be  a  legitimate  part  of  the 
police  power  of  the  state,  whose  exercise  is  unlimited. 
To  raise  or  lower  tracks  at  a  single  city  may  cost  mil- 
lions of  dollars.  This  class  of  expenses  grows  very  ra- 
pidly in  the  United  States  as  population  becomes  den- 
ser. Shall  we  capitalize  them  also,  as  has  been  done 
abroad?  Safety  appliances  must  be  adopted.  Ingen- 
uity is  adding  yearly  to  the  number  of  these;  and  the 

22 


public  demands  rightly  that  they  be  put  into  use  as 
soon  as  their  value  is  demonstrated.  But  all  these  things 
take  money — and  a  lot  of  it. 

Steel  cars  are  a  good  illustration  of  this  kind  of  ex- 
pense. They  are  coming  into  general  use,  and  it  has 
been  proposed  to  make  their  purchase  and  employ- 
ment compulsory  even  before  their  benefits  have  been 
fully  proved.  To  buy  them  is  a  big  expense,  but  that 
is  only  the  beginning.  A  train  made  up  of  them  is  sixty- 
five  per  cent  heavier  than  one  composed  of  old  style 
cars.  More  trains  must  be  run  to  render  the  same  ser- 
vice. Tracks  and  bridges  must  be  strengthened.  So 
the  cost  of  service  is  increasing  all  the  time  through 
improvements  that  the  railroads  are  just  as  anxious  as 
the  public  to  adopt.  Every  one  of  these  improvements 
costs  money.  Very  few  of  them  produce  one  dollar  of 
additional  revenue.  Yet  the  railroads  must  pay  their 
bills  or  go  into  the  hands  of  a  receiver.  Such  an  in- 
crease of  rates  as  will  cover  these  expenses;  the  accu- 
mulation of  at  least  such  a  surplus  as  will  furnish  funds 
for  these  daily  demands  in  the  domestic  economy  of 
the  railroads,  must  be  authorized,  unless  traffic  is  to 
decrease,  transportation  facilities  to  grow  worse  instead 
of  better,  or  capitalization  to  be  increased  until  any 
rates  that  the  people  can  pay  will  fail  to  cover  the  fixed 
charges  of  the  common  carriers. 

An  extraordinary  doctrine  is  now  being  propounded 
in  many  quarters.  It  is  held  that  the  accumulation  of 
a  surplus  is  evidence  that  rates  are  too  high  and  ought 
to  be  lowered;  just  as  if  the  man  who  earns,  saves  and 

23 


puts  a  dollar  in  bank  to  meet  future  contingencies 
thereby  admitted  himself  guilty  of  either  dishonesty 
or  extortion.  It  is  held  that  a  railroad  has  no  right  to 
receive  or  enjoy  income  derived  from  any  other  source 
than  the  operation  of  its  plant.  It  is  asserted  that  a 
railroad  has  no  right  to  the  natural  increment  in  the 
value  of  its  property,  though  this  is  not  denied  to  any 
other  corporation  or  to  any  individual  under  like  cir- 
cumstances. It  has  been  attempted  to  apply  these 
principles  to  the  regulation  of  railway  property,  strip- 
ping it  of  privileges  enjoyed  by  citizens  and  other  cor- 
porate entities  under  the  constitution.  But  how  about 
the  other  side  of  the  shield?  Does  the  state  recognize 
and  abide  by  this  same  doctrine  when  its  own  revenue 
is  at  stake? 

All  the  earnings  of  the  railroad,  from  whatever 
source  derived;  all  the  property  to  which  it  holds  title, 
no  matter  how  acquired  or  held,  is  taxed  by  the  state 
as  the  property  of  the  railroad;]  either  indirectly  by  [a 
tax  on  gross  earnings  or  directly  on  assessed  valuation. 
The  state  has  taxed  surplus  and  all  improvements  made 
from  it  just  the  same  as  those  made  from  the  proceeds 
of  stock  and  bond  sales.  Can  it  do  this — can  it  tax  all 
earnings,  improvements  made  from  earnings  and  sur- 
plus without  confessing  that  the  holders  are  entitled  to 
the  property  and  the  income  from  it  as  truly  as  the 
state  is  entitled  to  the  tax?  The  rule  of  fairness  and 
the  equal  hand  of  the  law  should  make  the  obligations 
and  the  privileges  of  the  railroad  co-extensive.  The 
taxes  paid  by  the  railways  of  the  United  States  in  1910 


24 


were  about  13  per  cent  of  the  total  interest  and  divi- 
dends. They  were  over  25  per  cent  of  dividends  alone. 
That  is,  the  state  received  from  the  property  one-fourth 
as  much  as  all  the  owners  of  it  put  together.  In  the 
face  of  facts  like  these,  no  just  man  and  no  court  that 
regards  either  law  or  equity  should  question  the  right 
of  the  railways  to  enjoy  the  natural  increase  and  to 
earn  the  normal  rate  of  profit  on  all  the  property  they 
hold,  no  matter  how  invested  or  employed. 

It  is  not  a  political  but  an  economic  question  that 
the  country  has  to  consider  and  solve.  The  adjustment 
of  tarifif  taxation,  the  regulation  of  railroads  and  all 
other  similar  matters  over  which  the  legislative  power 
has  control  and  which  are  essentially  economic  and 
non-political  are  held  deliberately  within  the  range  of 
current  controversy  for  the  advantage  of  party  politics. 
So  long  as  they  can  be  kept  from  a  fair  and  permanent 
settlement  on  the  basis  of  economic  justice,  they  will 
furnish  rallying  cries  for  the  unthinking  of  one  political 
party  or  the  other.  The  country  cannot  rise  to  the  level 
of  its  duty  or  its  opportunity  until  the  scientific  know- 
ledge of  the  expert  and  the  action  of  the  just  judge  are 
applied  to  the  settlement  of  such  economic  issues. 

The  American  people  must  soon  begin  to  realize  how 
injuriously  they  are  themselves  affected  by  a  game  that 
has  been  played  for  so  many  years  with  their  business 
prosperity  and  their  future  welfare.  Meantime  the 
practical  questions  that  I  have  presented  and  that 
grow  straight  from  the  root  of  the  present  situation 
remain.     The  wisdom,  the  desire  for  justice,  the  in- 

25 


telligent  self-interest  of  the  whole  country  should  be 
concentrated  upon  the  answer,  which  is  not  really 
diflScult  to  find.  The  people  must  first  realize  that 
regulation  must  not  be  strangulation.  Every  restric- 
tion compatible  with  the  public  interest  may  be  applied 
without  impairing  the  position  of  the  railways,  or  their 
ability  to  continue  serving  the  public;  because  their 
interests  at  bottom  are  one.  It  is  high  time  that  a 
rational  perception  of  this  identity  should  put  an  end 
to  hostile  discrimination  against  the  railroad,  and  a 
policy  be  shaped  which  will  permit  the  railways  of  the 
country  to  lay  a  broad  foundation  for  transacting  the 
future  business  of  the  country,  by  providing  the  ma- 
chinery without  which  that  business  cannot  be  done. 
Since  the  greatest  need  is  larger  and  better  terminals, 
the  process  of  improvement  will  be  costly.  Since 
the  sum  to  be  raised  must  be  reckoned  in  billions,  the 
railroads,  if  they  are  to  maintain  their  wage  scales,  and 
their  standards  of  efficiency,  must  be  permitted  to 
charge  such  rates  as  will  enable  them  to  pay  interest 
on  the  additions  to  capitaUzation  representing  the 
money  invested  in  new  terminals,  and  also  accumulate 
a  surplus  sufficient  to  take  care  of  the  constantly  aris- 
ing demands  for  additions  to  the  existing  plant.  Courts 
and  commissions  will  see  that  excessive  rates  are  not 
collected.  On  the  other  hand  the  courts  have  affirmed 
the  right  of  the  companies  to  earn  a  reasonable  return 
on  the  total  value  of  their  property.  Between  these 
well-marked  lines  the  railway  rate  should  move,  ac- 
cording to  the  needs  of  traffic  and  the  development  of 

26 


\*-ri 


CAUfxymm 

the  business  of  the  country.  Rates  either  permanently 
unchanged  at  the  present  figure  or  lowered  by  com- 
pulsion mean,  in  view  of  the  existing  emergency, 
nothing  but  ruin.  That  ruin  will  not  be  so  immediate 
or  complete  for  the  railroads  themselves  as  it  will  be 
for  the  business  interests  to  which  they  will  no  longer 
be  able  to  give  a  prompt  and  adequate  service.  It  will 
be  far-reaching,  because  its  effects  will  touch  every 
man,  however  humble,  who  is  engaged  in  productive 
industry.  If  it  comes  it  will  be  the  most  disastrous 
catastrophe  in  all  our  business  experience.  The  whole 
question  may  be  summed  up  in  the  simple  fact  that  the 
business  of  this  country  has  grown  beyond  the  possibil- 
ity of  being  handled  by  a  railroad  system  costing  on  an 
average  $60,000  a  mile.  The  experience  of  the  whole 
world  is  against  such  a  proposition. 

I  do  not  underrate  the  importance  of  other  interests 
or  issues,  I  only  give  due  place  and  emphasis  to  this 
question  when  I  say  that  it  dwarfs  by  comparison 
every  other  that  bespeaks  the  attention  of  our  people. 
What,  in  comparison  are  any  of  the  innovations  or 
interpretations  of  the  national  will  which  have  recent- 
ly formed  the  subject  of  a  nation-wide  and  passionate 
discussion?  Across  every  stream  of  commerce  where 
it  enters  a  distributing  city  an  obstacle  grows  higher 
every  day,  restraining  the  impatient  tide  of  the  nation's 
exchanges.  It  is  time  for  all  of  us  to  lay  aside  preposses- 
sions, hostilities,  differences  in  points  of  view,  and  work 
together  for  an  object  infinitely  more  essential  than 
most  of  the  great  enterprises  deemed  so  national  in 

27 


their  scope  and  benefits  that  they  command  not  only 
the  sympathy  but  the  financial  backing  of  the  govern- 
ment itself. 

It  is  the  duty  of  every  business  organization,  of 
every  business  man,  of  capital  interested  in  safe  in- 
vestment and  labor  interested  in  sure  and  remunerative 
employment,  to  help  swing  the  country  into  line  be- 
hind the  only  policy  that  can  help  and  save  them  all. 
No  pledge  of  national  credit,  no  subsidy  in  cash,  no 
immunity  or  privilege  is  asked;  only  freedom  to  raise 
on  reasonable  terms  the  capital  without  which  the 
work  cannot  be  done;  implying  necessarily  freedom 
to  earn  on  that  capital  the  return  without  which 
it  will  not  be  forthcoming,  and  enough  additional  to 
make  and  keep  railway  equipment  and  service  equal 
to  the  progress  of  invention  and  improvement  and  to 
the  just  expectations  of  the  people. 

No  national  or  municipal  campaign,  no  moral  crus- 
ade, no  commercial  or  financial  adventure  or  assurance 
can  demand  or  ought  to  receive  from  you  and  others 
like  you  the  attention,  the  study,  the  energetic  support 
claimed  by  the  imminent  and  urgent  issue  which  I 
have  tried  to  present  in  outline.  In  a  day  of  big  things 
it  looms  above  them  all.  The  railways,  anxious  to  be 
active  in  the  upbuilding  of  the  country  and  the  intro- 
duction of  a  coming  era  in  transportation,  stand  at 
attention.  Will  the  country  give  the  word  of  permis- 
sion and  remove  the  heavy  cloud  of  doubt  and  depres- 
sion which  has  steadily  arrested  the  growth  of  the 
nation's  commercial  facilities? 

28 


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